Bone morphogenetic proteins (BMPs) are potent secreted signaling factors that function at long- and short-range and elicit critical cellular responses during development and homeostasis. Long-range signaling is key to the formation and function of morphogen gradients. Such gradients control the cell fate and tissue allocation and influence the patterning of early embryos as well as later developmental processes. Short-range signaling sculpts cellular junctions and has been implicated in the growth, development and homeostasis of synaptic junctions, such as Drosophila neuromuscular junction (NMJ). The fly NMJ is a glutamatergic synapse similar in composition and physiology to mammalian central synapses. The fact that individual NMJs can be reproducibly identified and are easily accessible for electrophysiological and optical analysis makes this genetic model system uniquely suited for in vivo studies on synapse assembly, growth and plasticity. In flies, BMPs shape NMJ development via canonical and non-canonical signaling pathways. The canonical pathway activates transcriptional programs with distinct roles in the structural and functional development of the NMJ in response to accumulation of phosphorylated Smad (pMad) in motor neuron nuclei. A noncanonical, Mad-independent pathway, connects synaptic structures to microtubules to regulate synapse stability. Intriguingly, pMad also accumulates at synaptic locations but the biological relevance of this phenomenon remained a mystery for over a decade. In recent work we discovered that synaptic pMad is selectively lost at synapses with reduced levels of postsynaptic ionotropic glutamate receptors (iGluRs). Moreover, mutants that lack a particular receptor subtype, GluRIIA, show complete loss of synaptic pMad signals but normal Mad-positive signals in the motor neuron nuclei. The expression of BMP target genes remains unaffected in GluRIIA mutant animals, indicating a specific impairment in the pMad production/ maintenance at synaptic terminals. More importantly, the accumulation of synaptic pMad followed the activity and not the net levels of GluRIIA-containing (type-A) iGluRs. Thus, synaptic pMad appears to function as a local sensor for NMJ synapse activity. Our data indicate that synaptic pMad marks a completely novel, noncanonical BMP pathway that is genetically distinguishable from all other known BMP signaling cascades. Unlike the BMP retrograde signaling pathway, this novel pathway does not require the BMP7 ortholog, Glass bottom boat (Gbb), but depends on presynaptic BMP receptors (Wit, Put and Sax) and postsynaptic type-A iGluRs. Also, nuclear and synaptic pMad are independently regulated: Genetic manipulations of type-A iGluRs induce proportional changes in synaptic pMad but have no effect on nuclear pMad. Conversely, excess Mad-GFP in motor neurons induces strong accumulation of nuclear pMad but has no effect on the synaptic pMad. Super-resolution microscopy revealed that synaptic pMad accumulates at the active zones as presynaptic discs, parallel with the iGluR fields and Brp-positive rings, which mark the sites of neurotransmitter release. The size and shape of pMad domains suggest that pMad associates with membrane-anchored complexes at the active zone. Since BMP signals are generally short lived, these domains likely represent pMad that, upon phosphorylation, remains associated with the BMP/BMPR kinase complexes at presynaptic sites. Interestingly, selective disruption of presynaptic pMad reduces the postsynaptic levels of type-A iGluRs, indicating that synaptic pMad functions to stabilize active type-A iGluRs at synaptic locations. This positive feedback loop provides a molecular switch controlling which flavor of glutamate receptors will be stabilized at synaptic locations as a function of synapse activity. We are currently investigating the molecular determinants underlying this positive feedback loop. Since BMP signaling also controls NMJ growth and synapse stability, BMPs may offer an exquisite means to monitor the status of synapse activity and coordinate NMJ growth with synapse maturation and stabilization.